The stability covenant in employment contracts is an additional agreement that can be included in the individual employment contract to ensure a longer duration of the employment relationship, binding the employee (or, in some cases, the employer as well) to maintain employment for a set minimum period.
This instrument meets the need for mutual protection and is part of a context in which labor flexibility is balanced by the need for contractual stability. The stability pact can be signed either at the start of the employment relationship or during the course of it.
Such an agreement between employer and employee may provide for a commitment (i) not to withdraw from the relationship by the employee alone, or (ii) by the employer alone, or, again, (iii) the constraint may cover both parties.
Where the covenant is in favor of the employer alone., the worker’s commitment not to resign must be remunerated. The remuneration may also be other than a direct monetary compensation to the worker, it may also concern, for example, in economic investment of the employer in specific training of the worker.
Similarly, the covenant not to terminate the employment relationship may be validly demanded from the employee if the employer company agrees to pay relocation expenses, extraordinary allowances and other benefits to the employee posted abroad or to another city for the period corresponding to the posting.
- Legal Discipline
The stability pact is not expressly regulated by the Civil Code, but its validity is based on Article 1322 of the Civil Code, which allows contracting parties to enter into atypical agreements as long as they are not contrary to law, public order or morality. However, there are some basic rules to follow:
- Written form:
- The stability pact should be formalized in writing and clearly integrated into the labor contract or a separate agreement.
- Time limits:
- The period of stability cannot be unreasonably long and must be proportionate to the interests of the parties.
- Compatibility with the worker’s non-derogable rights:
- The covenant may not prevent the employee from resigning altogether, but it may provide for a reasonable penalty for early termination. Said penalty cannot then be excessively vexatious in nature, under penalty of nullity.
If the covenant does not contain the provision of a penalty clause, the court will determine the amount of any damages in favor of the employer.
The penalty will not be payable by an employee who resigns early in the event of an inability to continue employment, such as a serious illness or injury that prevents the continuation of the relationship altogether. The penalty may also be avoided, for example, if the employee is able to prove that he or she resigned for just cause.
Similarly, in the case of a stability pact in favor of the employee only, the employer may dismiss the resource only for just cause.
In all other cases, the employee will be entitled to damages, consisting of the salary he or she would have received from the date of termination until the expiration of the stability pact, as well as any additional protections established by the court or legislation, or even by the pact itself.
- Conclusions
The stability pact in employment contracts is a useful tool for balancing flexibility and stability, especially in contexts where the employer invests significantly in the growth of the employee. However, its validity and enforceability depend on compliance with criteria of proportionality, fairness and transparency.
For both parties, it is advisable to take the advice of experienced labor lawyers to draft clear and legally compliant clauses, avoiding the risk of future litigation.